EI ALLOWS PEOPLE TO AVOID WORK; Acadie-Bathurst MP
says forcing people to move is a poor solution
New Brunswick Telegraph-Journal
Fri 21 Jul 2006
Page:
A1
Section: NEWS
Byline: By Nathan White Telegraph-Journal
Source:

A new study shows that employment insurance is
artificially propping up small regional economies, while holding back
individuals in those regions from reaching their potential.

The report by the C.D. Howe Institute goes on to argue that recent reforms to
Canada's employment insurance system discourage people from moving to find work,
keeping unemployment high in some areas.

Some regions aren't feeling the prosperity Canada is enjoying, and the
difference between have and have-not regions is greatest in Eastern Canada, says
the study, entitled Running Hot, Running Cold: Regional Jobless Numbers Not
Reflecting Hot Labour Market.

"The differences between regions have become sharper over the last 10 to 15
years," said Yvan Guillemette, a policy analyst at C.D. Howe, a public-policy think tank.

For example, in New Brunswick, the average unemployment rate was 10.2 per
cent in March. But around the province, rates ranged from as low as eight per
cent in the Saint John-St. Stephen region to as high as 15.6 per cent in the
Miramichi-Campbellton area.

"This seems contrary to what one might expect to see during an economic boom,
and it suggests that the boom has been milder than it could have been if Canada
were realizing its full economic potential," says the study.

It highlights pilot EI programs that increase eligibility and benefits in
regions with high local unemployment rates, effectively providing a disincentive
to finding stable employment elsewhere.

"Such regionally tilted EI provisions give the unemployed some reason to stay
put rather than move to areas where employment possibilities are better," says
the study.

The U.S. and Canada have both seen shrinking unemployment in recent years,
but Canada's rates have become more inconsistent from region to region while the
U.S. experienced the opposite effect. The report points to EI programs designed
to support seasonal industries as the problem.

"Definitely our system accommodates those who want to only work three or four
months a year and be on EI the rest of the year, and year after year after
year," said Guillemette.

Among the recent changes cited are initiatives to provide claimants with
extra weeks of benefits and reduce qualification requirements. Guillemette said
the economy would be better off if the same EI system were in place everywhere
in Canada.

"There have been a lot of changes in the last five or six years to
accommodate seasonal work and I think we should go back on that, " said
Guillemette.

"The labour market is not as strong, dynamic and viable as it would be
otherwise if people were more inclined to move between regions and
opportunities," said Guillemette. "The EI program has a lot to do with it and I
think that's where we should look first for solutions.

"Some regions might end up with a loss of population and some loss of
economic activity, but that's probably way overdue because we've been
subsidizing this type of work and this type of lifestyle for a long time. We
have to realize we can't keep doing that forever."

But according to Acadie-Bathurst New Democratic Party MP Yvon Godin, that's
the wrong attitude to apply to rural New Brunswick.

"They're not understanding the region and seasonal work," said Godin, who's
passionately in favour of increased EI benefits to maintain seasonal industries.

"For them, the answer is, everybody move to Moncton. People of the North, get
up, get out, give up and go to Moncton," he said.

"The answer is not to clean out the people of Northern New Brunswick, the
answer is to work on economic development and do it the right way."

Godin sees growth opportunities for the North in developing the Port of
Belledune and in industries such as wind power and value- added fish processing.
But he strongly believes seasonal industries have their place, and the workers
who fill those jobs shouldn't be forced to move elsewhere.

Ted McDonald, an economics professor at the University of New Brunswick whose
research on EI was cited by the C.D. Howe study, said
he's not convinced the program's structure is a major cause of disparity between
regions.

"There are much bigger things at play here," said McDonald, pointing to other
reasons people choose not to move, such as age and family commitments. Some
people who excel at seasonal work might not have transferable skills that would
help them land employment in other areas, he added.

"The jury is still out on the size of the effect (of EI)," he said. "I
haven't seen anything to show a strong effect. The evidence is still patchy and
inconclusive."

Cutting EI benefits in areas with high unemployment "might exacerbate
conditions there," said McDonald. "There's the potential for the pendulum to
swing too far the other way."

But he does believe the study raises an interesting topic that should be
discussed at a national level.

"A debate has to be had over the role of EI in seasonal work," he said. "But
there's a lot of reluctance for that debate to occur because it's so politically
charged."

As Godin wryly pointed out, "I've never seen a rally in the street with
people saying, 'We have to cut the employment insurance!'"

© 2006 Telegraph-Journal (New Brunswick)

Note:
Length: 857 words